Dan Nathan's Apple Trade Ahead Of Earnings

Dan Nathan suggested on CNBC's "Options Action" that investors with a long position in Apple Inc.AAPL should consider buying some protection ahead of earnings.

Nathan would sell the October 160 call for $2.95, against a long stock position and he would buy the October 140 put for $2.95. If the stock trades higher until the October expiration, Nathan would participate in the upside until $160 or approximately 7 percent higher. If the stock trades lower, the options strategy offers protection below $140, or 6.35 percent below the current stock price.